Bank of Canada Maintains Policy Rate at 5% Yet Again

April 10, 2024 - The Bank of Canada (BoC) announced today it was maintaining its policy interest rate at 5% and that it was continuing to "normalize" its balance sheet through quantitative tightening. While the announcement noted that "inflation is still too high and risks remain", it cited easing inflation in recent months and confirmed its expectation that inflation would ease to less than 2.5% in the second half of this year and reach 2.0% (the Bank's target) in 2025. This is against a background of easing inflation in most advanced economies, which the Bank expects to reach central banks' targets in 2025.

The BoC also revised its GDP forecast for Canada to 1.5% in 2024 (almost double their January forecast of 0.8%), 2.2% in 2025 (down slightly from 2.4% in January). The Bank is also calling for growth of 1.9% in 2026. Globally, the BoC antiipates 2.75% GDP growth in 2024 and about 3.0% in 2025 and 2026. This is also higher than their January call. You can read the announcement here.